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  • 11 SaaS Trends for 2020: New Forecasts You Should Know

11 SaaS Trends for 2020: New Forecasts You Should Know

Category: B2B News

Today, Software-as-a-Service (SaaS) solutions are part of nearly every business workflow. It’s logical given the agility, accessibility, versatility, and cost-effectiveness of these offerings. But, with SaaS trends taking the lead in disrupting the industry, a lot is set to change.

Already, there is an unbundling of SaaS, pricing policies are changing, and new technologies like AI and machine learning are coming into play. Some of these changes seem superficial, but they may have a significant impact on the operational costs of a business. Others are critical and require close monitoring to see how they pan out.

For this reason, we have compiled the hottest SaaS trends to prepare you for the curveballs that the industry might throw at your business. Having this information at your fingertips will help you use the ideal SaaS solution for your business and reap all its prescribed benefits.

trends for the SaaS industry

Cloud computing has three major offerings, namely software-as-a-service (SaaS), Infrastructure-as-a-service (IaaS), and Platform-as-a-service (PaaS). Businesses consume these deployment models differently. To illustrate, in 2018, 89% of businesses in the world were using SaaS, 73% IaaS, and 61% PaaS.

The Percentage of Businesses Using Different Cloud Computing Models

89%

Software-as-a-service (SaaS)

73%

Infrastructure-as-a-service (IaaS)

61%

Platform-as-a-service (PaaS)

Source: IDG

Designed by

What you need to know is that since the inception of cloud computing, software-as-a-service (SaaS) has been the most widespread offering. Recently, however, IaaS and PaaS have made meaningful inroads, but none have been able to surpass the SaaS dominance. The superiority is set to continue thanks to the simplicity, low cost, and flexibility of the SaaS model.

Speaking of cloud computing delivery models, we have a comprehensive guide that details the difference between SaaS vs. PaaS vs. IaaS.

A study by BetterCloud revealed that businesses are increasingly using SaaS solutions. For example, in 2015, the average company was using 8 SaaS tools, whereas, in 2017, this number rose to 16. Businesses are becoming so dependent on SaaS that in its absence, some things seem unworkable.

Even as businesses continue to invest massively in SaaS software, there is a need to cast an eye on the future. Unfortunately, we don’t have the crystal ball to foretell what will happen in the coming years. However, the following SaaS industry trends can provide a hint into what promises to be a bright future for the SaaS industry.

1. Artificial Intelligence (AI)

Topping our list of SaaS trends is the increasing use of more sophisticated artificial intelligence (AI) tech. Artificial intelligence is no longer in the nascent phase. The technology has taken the entire business world by storm, opening horizons that were previously unfathomable and upturning the way we run organizations. Notably, the entry of AI into the SaaS fray has caused enormous attention, and its disruptive forces are promising to change everything from programs for accounting to CRM.

AI has an outsized potential in optimizing the business process, automating redundant tasks, improving efficiency and productivity, and augmenting human capabilities. Unfortunately, today, even with the IT leaders going all out to develop AI systems, only a meager of this potential has been utilized. The prospect of the potential risks has been the foremost stumbling block, but luckily, SaaS companies are finally breaking this barrier.

The best thing is that even with its risks, AI is still the most innovative technology in the modern SaaS market. It comes as no surprise, then, that SaaS companies are breaking the shackles that inhibited the development of AI, creating a well-defined path for its fulfillment in SaaS. Actually, since 2017, AI has been causing massive waves in the SaaS industry, and the trend is not cooling off any time soon.

Companies like Salesforce and AppZen are setting the trend with AI-optimized SaaS solutions. For example, businesses are relishing improved personalization, speed, security, and automation brought about by this technology. Moreover, the use of AI-powered chatbots has enabled companies to enhance the level of customer service responsiveness and personalization.

Key Artificial Intelligence Trend Takeaway

  • The more advanced AI systems of today have reinforced SaaS platforms and increased the productivity of users.
  • AI-driven SaaS tools can optimize business processes further.
  • Leveraging AI in SaaS can automate redundant tasks more efficiently while augmenting human capability.
  • Better still, AI can improve responsiveness and customer interactions when used alongside SaaS tools.

2. White Labeling in SaaS

White labeling is one of the fastest-growing SaaS market trends in cloud computing realms. White-labeled SaaS solutions are beneficial to businesses, especially those in the startup stage. Picture this; as a small business owner, you’ll need to deal with numerous software providers to get things done. This increases overhead in management time, and inflates paid out costs. Above all, it makes it difficult to “sell” your brand as a consistent entity.

To evade these problems, business owners are turning to white-labeled SaaS solutions. This way, it becomes easy for businesses to use SaaS tools that look native. Besides, companies can benefit from the cohesive experience thanks to the tailored features and interfaces.

Moreover, emerging SaaS companies are using white labeling as a quick channel to enter the market. Instead of building new solutions from scratch, many vendors are leveraging white label partnerships to deliver the solutions that their customers want while retaining their brand identity. White labeling for SaaS works the same way as dropshipping. This means selling solutions developed by a different company but customizing it to your branding.

This trend is not entirely new, but we predict it will persist beyond 2019. Remember, the cries for one-stop-shop platforms are getting louder by the day. Besides, business owners nowadays seem to care less about the initial software developer. All clients want is a solution with the right features to meet their exact needs. These factors have kept the white labeling SaaS trends going.

Key White Labeling Trends Takeaways

  • White labeling can speed up the time to market for SaaS solutions.
  • It allows SaaS companies to deliver better services to their clients as companies will no longer need to build dedicated software for their operations from scratch.
  • Additionally, white labeling delivers higher revenue per client and client lifetime value, hence a higher profit per client.

3. Blockchain and SaaS

There is no doubt, blockchain and SaaS are two disparate entities. In its own right, blockchain technology is inarguably revolutionary. The technology has often taken center stage in bitcoin-related topics. As such, no one gave this technology a chance in the SaaS industry. However, we must agree with one fact: blockchain can deliver the transparency so craved in the SaaS arena.

Remember, SaaS companies thrive on the grounds of transparent cooperations and trustworthy transactions. Blockchain and decentralized databases can add much need transparency, thus improving SaaS offerings.

Most importantly, blockchain can help SaaS companies build foolproof systems and sidestep the security challenges often associated with traditional databases. Better still, blockchain can enhance business reliability, thereby increasing customer loyalty.

The benefits of Blockchain in SaaS are as clear as day. Notably, the technology is set to massively disrupt SaaS verticals like tax collection, online payments, auditing, government borrowing, and compliance.  There is no doubt, blockchain will add value to SaaS offerings.

Currently, there are not many Blockchain/SaaS connections to talk about. All we know is that this trend is more than just a SaaS fad. It’s undoubtedly inevitable that blockchain technology will, at one time, become a permanent fixture in SaaS offerings. Who knows? 2020 might be the year the technology becomes a full-blown anchor to SaaS solutions.

Key Blockchain Trends Takeaways

  • With the increasing accessibility of the internet, businesses have become more global. However, along the added opportunities come security risks and transparency issues. Luckily, with blockchain, it is easier and quicker to monitor inaccuracies in data and address them.
  • Blockchain enables SaaS companies to stop fraud, thus, making the security levels of platforms more advanced.
  • Better still, it enhances reliability, thus, improving customer loyalty.

4. SaaS Connections and Integrations

SaaS connectivity limitation has been the main reason why companies implement and expand API integration. For example, nowadays, businesses have to use numerous software solutions to accomplish tasks. If not well-integrated, these solutions create a heterogeneous IT ecosystem, thus limiting the delivery of quality services.

Besides, many companies want to combine new solutions with the underlying on-premise systems, rather than creating a new IT environment to accommodate both. Also, companies nowadays view data migration as a hot potato. Indeed, many would rather blend data with their existing IT infrastructure rather than migrate it to a different cloud.

For these reasons, the demand for hybrid support between cloud backend and on-premise systems is immense. Seamless integrations are now a base requirement in every SaaS solution. Unfortunately, until recently, not many SaaS companies had plans to meet this demand.

However, the integrations and SaaS connections trend have gathered traction in the last few years. Nowadays, businesses are looking for SaaS solutions that work with the tools they already use. Luckily, more and more SaaS companies are embracing this fact. As a result, many are providing solutions with greater integration capabilities to avoid falling short of this critical requirement.

Key SaaS Connections Trends Takeaways

  • Businesses are looking for SaaS solutions with advanced integration capabilities; thus, we can expect more software vendors to offer flexible systems that can play well with other applications.
  • There is an increasing demand for hybrid support for cloud-based backend and traditional IT systems. Luckily, vendors are starting to provide this. Meaning, businesses using legacy platforms might not have to abandon their systems for cloud-based applications (at least, not for now).

5. Vertical SaaS

As you may have known, there are two types of SaaS, namely vertical and horizontal SaaS. Horizontal SaaS solutions are generic and target as many clients and fields as possible. An example of a horizontal SaaS solution is Salesforce CRM.

Nearly all traditional SaaS software began as “horizontal.” Interestingly, horizontal SaaS vendors have a bigger total addressable market (TAM) but face multiple challenges in their sales and marketing endeavors. For example, horizontal SaaS marketing teams have to run numerous campaigns simultaneously to reel in new clients.

On the other hand, a vertical SaaS solution suits specific business needs or fields. As a result, the vertical SaaS has a smaller TAM. Examples of vertical SaaS products include logistics analytics, retail analytics software, Repsly, and health BI software. Thanks to its ability to serve the distinct needs of a specific industry, vertical SaaS is seen by IT experts as the new-generation proxy to horizontal SaaS.

In the last decade, more and more companies have developed a massive proclivity towards SaaS solutions that comprehensively solve their specific needs. As a result, the market size for vertical SaaS software has more than tripled in that period. (Medium.com).

The massive uptick in the volume of vertical SaaS products isn’t surprising thanks to its notable benefits. This delivery model provides multiple benefits, including business value, customer intelligence, and improved data governance. Moreover, vertical SaaS products can be customized based on the client’s demand or specific industry needs. Even better, vertical SaaS products offer increased flexibility, more upselling opportunities, and lower client acquisition costs.

Market size of Vertical Saas

Key Vertical SaaS Trends Takeaways

  • Unlike horizontal SaaS, vertical SaaS has a smaller TAM, but it’s easier to market. Hence, it is becoming more popular, especially for software developers.
  • Vertical SaaS is ideally perfect for businesses that want highly customizable and targeted solutions.

6. The Rise of MicroSaaS

Generally, the biggest SaaS niches are dominated by 9+ competitors. This makes it difficult for emerging vendors to carve a space for themselves in these competitive spaces. But the highly saturated market hasn’t prevented innovative minds from making an impact. Instead, it has inspired them to create micro solutions that augment the functions of core niche offerings.

This has led to the rise of an invaluable industry focused on developing microSaaS products. So, what is microSaaS?

A microSaaS is a small tool designed by one person or a small group of people to improve the existing function of a SaaS product. These tools include extensions, add-ons, or accessories to other platforms or tools. So, how does microSaaS work?

Take the content management systems (CMS) arena, for example. This niche is the battleground for big players like WordPress, Wix, Squarespace, and Joomla!. A miracle is needed for a new entrant to knock these giants off their perch. You can learn more about these tools in this guide to CMS platforms.

However, this doesn’t mean that an innovator with an interest in the CMS niche has no chance to express his/her skills. Instead of putting up a fight against industry behemoths, microSaaS allows people to contribute by creating complementary add-ons, plugins, and extensions.

Today, there are plenty of microSaaS tools doing very well in the SaaS market. They include Boomerang for Gmail, Yoast SEO plugins, Grammarly, Mailtrack, and Sprout Social.

MicroSaaS projects often require small costs and can easily be accomplished without outside funding. Interestingly, microSaaS are location-independent and have high margins. These benefits, coupled with low overheads, have instigated the massive uptick of MicroSaaS solutions.

Key MicroSaaS Trends Takeaway

  • MicroSaaS encompasses small complementary tools like extensions, add-ons, and plugins. With these, software developers no longer have to compete with industry giants. Instead, they can create applications that complement them.
  • There is a proliferation of MicroSaaS tools in the SaaS marketplace, so users can expect to have more ways to customize the software solutions that they utilize.
  • MicroSaaS requires low costs to create but often deliver higher profit margins. As a result, many developers opt to create these instead of full-fledged programs.

7. Mobile-First Approach

According to CNBC, 72.6% of people will use smartphones for the internet by 2022. Also, according to another study by eMarketer, the average person spends over 120 hours per month staring at their smartphones. These numbers are pretty telling about how the nature of the SaaS market will pan out. They show clearly that the mobile is the proverbial promised land for business SaaS development.

Business owners are increasingly running their businesses from their smartphones. In a similar light, many employees prefer having mobility as they do their jobs. This paradigm shift in mobile device usage has caught the attention of SaaS vendors, and they are responding to the demand. As you may notice, SaaS solutions for project management and communications now come with robust and function-rich mobile apps.

The mobile experience trend is at the onset. Therefore, we expect SaaS companies to continue creating and improving mobile apps for their tools and services. There is an urge to evolve faster to keep up with the pace and direction mobile technology is moving towards. We project this trend to persist well beyond 2020.

Internet Access Via smart phone

Key Mobile-First Trends Takeaway

  • The mobile-first experience in SaaS is gathering steam due to the increasingly fast pace of modern workflows.
  • With the increased use of smartphones, we can expect more SaaS vendors to create mobile versions of their core products. Moreover, we can expect more extensive features for mobile applications.

8. Migration to PaaS

Both PaaS and SaaS are cloud computing offerings. So, how is migrating to PaaS a key SaaS trend? One thing you’ll note is that innovation in the SaaS industry is on high gear. Every SaaS company is improving its offerings to stand out amid the cutthroat competition. As this happens, client demands keep on changing. As a result, retaining clients is now more challenging than ever.

This has forced SaaS companies to rethink their strategy. In a bid to retain customers, SaaS vendors are now moving to platform-as-a-service (PaaS). PaaS empowers clients or businesses to develop custom applications as integral add-ons to their unique services. Some of the SaaS companies setting the standards in this trend include Box and Salesforce.

The urge to launch PaaS-centric solutions is not purely driven by the desire to control a sizeable market share or retain customers. Interestingly, there are plenty of other underlying factors, most notably the benefits remitted by PaaS. For example, PaaS is a flexible, accessible, and robust delivery model that enables clients to scale their businesses with ease. Besides, PaaS provides the security needed for enterprises to perform multiple automatic upgrades more regularly.

Key Benefits of PaaS

Key Migration to PaaS Trends Takeaways:

  • PaaS enables businesses to create custom applications as add-ons to their core services, making it a boon for companies that require high flexibility.
  • Salesforce and Box are leading the way in the migration to PaaS.
  • Migrating to PaaS is helping SaaS vendors improve customer retention; thus, the increase in demand.

9. Unbundling of SaaS

What comes to mind when you hear about a traditional SaaS software? A robust, full-featured platform, right? Yes, the horizontal SaaS solutions often focused on providing every imaginable feature that a tool in their section might need. But let’s face it, in the modern era, having all industry features packed in a single software is overkill.

Let’s take this from the perspective of a small business, for example. To remain afloat, a small business only needs a small set of specific functions. This means a feature-rich software is too big for the needs of such a business. This is where unbundling comes in handy.

Unbundling of SaaS is a term used to describe the growing list of startups that offer software solutions packaged in the form of an API instead of the traditional “full-featured” solution. These types of enterprises are on the rise, and they are doing pretty well on the SaaS market.

A good example is Clearbit. This platform provides an API that empowers businesses to enhance user information. Traditionally, this type of function was done using contact enrichment software. But with Clearbit, you get an API and suite of add-ons that work in unison. This way, the solution allows you to customize your own user experience based on your specific needs.

Other examples include supportify.io and supportive.io.

Unbundling of SaaS is becoming a familiar sight in the SaaS markets. The customized yet rich, user-friendly features are irresistible for businesses, especially startups. We anticipate this trend to keep the momentum beyond 2020. So, brace yourself for more unbundling of SaaS.

Key Unbundling of SaaS Trends Takeaway

  • Unbundling APIs differ from traditional APIs in that they don’t specifically target developers first.
  • They are highly effective when used to create internal tools.
  • Interestingly, the APIs are packaged with a suite of other tools and not directly with other APIs.

10. Pricing Policy Change

SaaS companies have often thrived on account of flexible pricing structures. By making prices flexible enough for businesses, it has been easy for vendors to grow revenue. However, in recent years, a pricing strategy revolution is taking place.

Competition is getting stiffer, and more features are cropping up. As a result, businesses have been forced to retreat to the drawing board. There is an increasing need to implement strategic pricing changes to woo more customers.

More often than not, pricing delivers the desired results. To illustrate, in 2018, 98% of companies achieved positive results using new pricing policies. In the same spirit, SaaS companies are not terrified of trying new pricing SaaS trends. There is a strong belief that with data-driven pricing techniques, more SaaS companies will make pricing changes in 2020.

SaaS Companies that Achieved Positive Results

Key Pricing Policy Trend Takeaway

  • Many SaaS companies reap the desired benefits when they change the pricing strategy. In a similar light, this trend also favors customers who want to spend their SaaS budgets wisely.
  • SaaS vendors are using data-driven strategies to optimize their pricing according to the needs of their target market.

11. Remarkable Branding

As we mentioned earlier, every niche in the SaaS industry is dominated by several high profile vendors. Typically, these vendors provide solutions with near-identical features. As a result, customers are forced to look beyond these features when making purchase decisions.

Software vendors are well-aware of these SaaS trends and have taken their battles to branding techniques. Not long ago, no one envisioned branding as a critical differentiator for SaaS vendors. But competition has driven brands to heights they never imagined. Today, SaaS companies are putting a significant emphasis on branding to distinguish themselves from the crowd.

A closer look into the most successful SaaS brands reveals one fact: without consistent details across all touchpoints, it’s nearly impossible to win new customers. Branding changes the way customers perceive a SaaS brand. It increases brand awareness and drives new business.

SaaS brands that are leading the way in branding include Zendesk and MailChimp. More SaaS companies will follow suit as corporate identity continues to take a lead role in marketing.

Key SaaS Branding Trend Takeaway

  • SaaS clients are now looking beyond pricing to make purchase decisions.
  • Branding is now a critical element in customer acquisition.
  • Brands that imprinted consistent branding across all touchpoints are attracting more customers.

How Will These SaaS Trends Affect Your Business Strategy?

The race to digitize the business world is intense. IT experts have rolled up their sleeves, and the business, in general, is set to benefit from the collective efforts. SaaS has been an area of focus for long, and it comes as no surprise to see the number of trends driving this space.

As you have read in our list of trends, AI has given SaaS the impetus required to power future innovations. On the sides, vertical SaaS is making commendable inroads, whereas integrations and SaaS connections are now a base requirement. As if that is not enough, API connections are now integral to SaaS solutions, and microSaaS is a norm in the industry.

As a modern business, you cannot afford to miss out on the benefits of SaaS. This means you need to keep close tabs on the things taking place in this space. The SaaS trends we’ve just discussed will propel the industry to new heights, that’s for sure. To get the best SaaS industry overview, read our compilation of key SaaS industry statistics.

What you need to know is that your business is at the center of the SaaS trends cyclone. Whether you are a SaaS vendor or business that consumes SaaS solutions, you definitely have to prepare for SaaS disruptions. The changes will continue coming in thick and fast, and this might be a case of “survival of the fittest.”

The first step to making the most out of these SaaS trends is arming your business with the right software tools. If you run a small business, read our guide to see the list of SaaS tools for small businesses that you need to install.

By Nestor Gilbert

Senior writer for FinancesOnline. If he is not writing about the booming SaaS and B2B industry, with special focus on developments in CRM and business intelligence software spaces, he is editing manuscripts for aspiring and veteran authors. He has compiled years of experience editing book titles and writing for popular marketing and technical publications.

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